Defra chooses evolution, not revolution on tenancy reform

The government has published its response to the independent Rock Review which in October 2022 put forward a set of 74 recommendations on measures to support the agricultural tenanted sector.

After reviewing the recommendations, the government has announced it will be implementing the following main measures:

• Plans for a new Farm Tenancy Forum to support the implementation of the government’s response to the review. It will explore all issues relating to the tenant farming sector in England – and provide ongoing engagement and feedback between Defra and the tenanted sector.
• The government is considering whether to introduce a Tenant Farming Commissioner. It plans to launch a call for evidence this summer to explore the benefits and impacts of how this might work in practice and how such a role might fit within existing procedures and regulations.
• RICS has been asked to develop a new Code of Practice to set out standards of expected behaviour for all parties in the sector and to help encourage more collaborative tenant-landlord relationships.

No immediate legislative changes are currently planned, but this is something that will be kept under review by the Farm Tenancy Forum.

The government also says it has taken on board the various points raised in the review about barriers tenant farmers can face in taking part in agri-environment schemes and is trying to improve the design to make them more accessible.

It also highlights the consultation launched at Budget 2023 to explore the extension of inheritance tax (IHT) relief to include land in environmental land management schemes and ecosystems service markets. This explores an option to limit IHT relief to land let out for a minimum of eight years.

The government’s response has predictably met a somewhat mixed reaction. The Country Land and Business Association said it was a ‘pragmatic’ way forward on tenancy reform, suggesting that some of the legislative changes set out in the original Rock Review would have reduced the amount of land made available to tenants.

The Tenant Farmers Association said the most significant outcome is the consultation on tax reforms and, overall, it is disappointed that that DEFRA has backed away from implementing many of the measures needed to truly revitalise the tenanted sector of agriculture.

The TFA’s point was also echoed by Baroness Rock who said she would ‘have liked the response to fully recognise all the findings of the review, in particular regarding the increase in new clauses being inserted into Farm Business Tenancies, and on tenants engaging in diversified activities. Whilst I welcome the new Farm Tenancy Forum, this must be focused on implementing the findings of the Review to be successful.”

The agenda laid out by the government is pretty conservative, but at a time when there are still many uncertainties around the impact of the transition away from Basic Payments and how private markets for the delivery of environmental benefits will work this could prove to be a sensible approach. Intervening in the marketplace at a point when there are so many spinning plates would have run the risk of producing adverse consequences. This cautious approach may also have been influenced by the pending General Election given the Conservatives ‘lungs’ are in the countryside.

There are plenty of examples of landlords and tenants working proactively together to reach amicable arrangements that work for both parties and the focus should be on encouraging more of this.